Over the last several weeks, both Mitt Romney and Barack Obama have traveled around the country informing the American people about how their opponent’s plan to reform Medicare spending will ultimately ruin the system itself.
Romney claims that Obama has cut future Medicare spending by $716 billion, while Obama asserts that his opponents’ plan will “voucherize” the system, leading to higher costs for seniors.
So who is right?
Well, both of them.
When Mitt Romney picked Paul Ryan as his running, he also (to an extent) picked Ryan’s policy plans, which are some the most well defined amongst Congressional GOPers.
And Ryan’s plan to slow down the rising is one in which Romney seems to have adopted on the campaign trail. The plan, which is outlined in Ryan’s “A Roadmap for America’s Future” Budget Proposal, proposes to tackle Medicare’s rising costs by instituting a system in which recipients would be allotted a certain amount of money to pay for a Medicare plan of their choosing. The main criticism of the plan (and the way that it cuts costs) is in the limited growth rates of payouts. When attacking Ryan’s plan, the Obama Campaign points to a CBO report which stated that Ryan’s plan would increase the out of pocket costs for Medicare recipients by over $6000 a year by 2020.
This claim is accurate. Those findings were very much present in the CBO report.
The only problem is that the report was on Ryan’s 2011 plan for Medicare. He has since come out with a new revised plan that raises the allotted growth rates, undoubtedly lowering the future out-of-pocket expenses for Medicare recipients.
Yet, while the future cost for recipients under Ryan’s plan will probably be less than $6,000, the new plan will still cost seniors. The CBO has yet to analyze the revised plan, so an up-to-date number is not available. But, the fact remains that both the 2011 and 2012 Ryan plan limit spending by limiting payouts to recipients.
So the Romney-Ryan plan aims to limit spending by limiting the growth of future payouts. But they are quick to point out that Obama cut future Medicare spending by $716 billion a year under Obamacare. So… What’s the difference?
Well, while Ryan and Romney’s plan puts the burden of future growth on the recipients, Obama’s plan places most of the burden on private insurance companies, as well as doctors and hospitals. In addition to an effort to prevent Medicare fraud (which is estimated to account for 8.4% of the $716 in spending reductions), Obama’s plan lowers future costs by cutting down on Medicare payments given to hospitals and insurers for services. This will prevent an increase in direct out-of-pocket expenses for seniors, but the additional costs that healthcare providers will have to cover may lead to indirect effects such as lower quality or availability of care.
Both Obama and Romney are going around the country speaking to crowds about how their plan strengthens Medicare while the other’s plan weakens it.
Here is the reality - our government needs to reduce our deficit. And on top of this need, Medicare costs are set to grow rapidly. Both sides acknowledge that cost control mechanisms are needed to stop the additional spending, and both sides have put forward plans.
Neither of them “strengthens” the program, but rather propose different ways of keeping it from ballooning out of control.
Obama’s plan does this by decreasing payments to doctors.
Ryan’s plan does this by increasing costs for seniors.
Neither will make things better for Medicare – its up to voters to decide which will make things less worse.